Doosan Infracore India Pvt.Ltd is the Indian arm of Korean giant Doosan Infracore. The company offers the widest range of construction and mining equipments in India.
S Manjunath, General Manager – Sales, Doosan Infracore India told Sandeep Menezes that construction equipment players need to take key strategic actions such as design and build equipment suitable to the Indian market apart from looking at a unique export business approach.
Excerpts from the interview:
How do you foresee the evolving growth scenario and main demand drivers across the construction equipment sector?
Post the 2014 general elections, there is an expected revival which will boost the development of India, as there are enormous opportunities with the new government granting infrastructure projects and allowing huge investments in infrastructure industry.
The Indian construction equipment sector is now in the verge of progression driven by growth in investment in the infrastructure sector. India has the potential to become the 4th largest global market for Heavy Equipments and is expected to be one of the biggest emerging markets going forward. While the market is expected to grow at a steady pace which will majorly be driven by infrastructure investment of USD 1 trillion during the 12th Five Year Plan, booming real estate sector and streamlining of coal and mining operations will support the growth of India’s equipment industry.
Moreover, if India has to successfully constitute 10 per cent of the global market by 2018, the construction equipment players also need to take key strategic actions such as design and build equipment suitable to the Indian market apart from looking at a unique export business approach. Thus, India is expected to see more competition among the existing players in the construction & mining equipment industry with such aggressive growth strategies.
We are witnessing major technological reforms in the Indian construction & mining equipment industry as demand for specialized and high-capacity equipment is on the rise. Comment.
Today’s construction equipments are highly cutting-edge compared to conventional systems that prevailed a few decades ago. Like automotive industry, there is a constant shift towards advanced, feature packed solution to offer better performance and productivity to customers. All Doosan equipments are designed and manufactured as per global standards, keeping in mind, the ever-changing demands of the customers. While, due to lack of strong Indian laws on environment and fuel emissions and the importance of quality yet to catch up, India made products are favorable with equipment buyers.
However in India, we ensure that our customers are benefited with latest technologies apart from requirements that are on par with the market demand. As specialized products are slowly gaining acceptance compared to products with general applications, the gap in technology between Indian made products and imported equipment are becoming narrower. As we could now witness the mechanization becoming inevitable with respect to precision of improvement in product, the need of specialized high-capacity equipment is catching up.
Interest rates have started to soften although they remain high, and most equipment sales happen through financing rather than self-purchase. What has been its effect the industry?
Interest rates remain high especially in construction equipment financing and due to the slump over the last few years, it is quite difficult to undertake where majority of the market relies on equipment financing. As there are no set standards, this is ultimately becoming a practice for the construction industry in India, involving high capital investment where customers often seek for equipment financing options which have longer repayment periods at flexible interest rates.
The mining and construction equipment are very expensive and over 85 per cent of product purchased is being financed. Constant funding from infrastructure projects including roads would help the companies rent out their equipment in order to lower the loan defaults.
Why has the equipment rental segment not reached its true potential in India?
The persistence to modernizing India’s infrastructure is rolling out construction projects at a scorching pace, which is fuelling demand for newer equipment. When this demand outpaces available investment resources among equipment manufacturers, there is an associated rise in demand for equipment financing for new or second hand equipment.
Renting is definitely a good makeshift solution especially in a in slump phase where the machine idle times are more and also as the purchase costs increase due to higher manufacturing costs of equipment manufacturers. However, the rental industry in India which is highly unorganized with no standard guidelines, constitute less than 10 per cent of the total construction equipment industry against 50 – 80 per cent share in the developed markets.
The Rental Association of India (RAI) does exist with some members and is making efforts to make structural changes in this unorganized sector. Besides this, there are other issues such as multiple tax systems, logistical constraints due to interstate multiple taxes, no uniformity in the RTO, octroi and entry tax regulations in various states, variation in classification of equipment and no custom duty benefits. Thus, on a broader point of view, the Indian rental industry has not grown as was expected primarily as there has not been much focus by the organized players. Construction equipment rental business is still a mere 7 per cent – 8 per cent of the total equipment market at present.
Currently, there exist a huge shortage of skilled equipment operators and technicians. Tell us about the extent of shortage and ways to mitigate it? How has Doosan assisted in training equipment operators and technicians in India?
There is a very large scarcity of skilled manpower especially with issues in getting the right talent, followed by training and retention. In the equipment rental business, training of manpower is a continuous process that needs to be imparted with adequate infrastructural support.
While there are lot or initiatives taken to improve sector skilled training, Doosan alongside with sales network to an extent, partakes in such training programs for operators of Doosan Equipment across India.
India is not governed by stringent equipment safety norms like those prevailing in the EU and US. Going forward, do you feel that equipment safety norms need to be strengthened in India?
In India, workers at site face several risks during their day-to-day work and safety here becomes a very important aspect that cannot be neglected. There are many cases where customers have started realizing the need to focus on safety aspects to which, equipment manufacturers are also taking this facet to global standards. Particularly in critical applications such as construction and mining sites, safety plays a major role and a small accident is enough to lead to downtime of the equipment. While the downtime is a huge loss to customers, safety plays a very important role in overall profitability of businesses too.
With the fast changing business scenarios, customers today demand equipments that not just focus on making better profitability but also to features on safety characteristics. Even OEMs who are upgrading their existing range of equipment need to emphasize towards such technologies besides government imposing strict safety norms.
What have been Doosan’s achievements since its foray into the Indian equipment sector? Going forward, does Doosan have a long term roadmap for the construction & mining equipments segment in India?
Since 2007, Doosan in India has served the construction and mining industry with array of equipment that holds prominent market presence globally. Doosan is ranked among top ten companies globally and in Korea, it holds the leadership position. The company would be focusing on introducing line up of Hydraulic Excavators in various capacities to serve applications for hiring segment and corporate clients across India.
Does Doosan intend to launch any new products or increase focus on a particular product segment in India?
Doosan has realized the significance of introducing an extensive line-up in coming years to serve the Indian market which are technologically advanced and efficient. Therefore slowly but steadily we would like to establish our presence in India with equipment for various applications in the pipeline. We would launch new models of Hydraulic Excavators, Bobcat Skid Steer Loaders and Portable Compressors.